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The Fitch Property was encumbered by a Deed of Trust and
Security Agreement (Deed of Trust) dated January 23, 1987,
reflecting a loan made by Aid Association for Lutherans (AAL) to
the Partnership in the amount of $3.5 million. The Deed of Trust
secured a Promissory Note (Note) signed by both Partnership
partners. The loan under the Deed of Trust was recourse in that
it was personally guaranteed by George Wells and petitioner. As
of June 29, 1993, the loan was in default, and AAL began the
process of foreclosure of the Deed of Trust. On August 27, 1993,
AAL notified the Partnership that “All of the legal and equitable
interest in the rents, issues, and profits of the [Fitch]
Property is vested in * * * [AAL]. * * * [AAL] is exercising its
rights under the Deed of Trust.”
At some point, AAL and the Partnership negotiated a
settlement agreement (which is not in the record) in lieu of
foreclosure whereby the Partnership would convey the Fitch
Property to AAL in full settlement of the outstanding
indebtedness.
On December 9, 1993, escrow instructions “on behalf of
* * * [AAL] and * * * [the Partnership]” were issued to First
American Title Insurance Company (the Title Company). The escrow
instructions include the following provisions:
Borrower has tendered to you in escrow the Grant Deed
(the “Deed”) from Borrower to Lender. Your acceptance
of these escrow instructions constitutes your
acknowledgment that (i) you have received and reviewed
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Last modified: May 25, 2011